Message Boards
Today's Active Topics Today's Active Cases Browse Forum Categories My Recent Activity My Messages Private Groups My Marked Threads My Subscriptions
Today's Active Images Today's Active Polls Most Active Topics Global Townie Map Advanced Message Board Search Message Board Terms of Use

Kids and Money by Douglas Carlsen, DDS

Start Discussion More by this author (62)
Kids are expensive. Any of us who have kids know this to be true. Setting limits and keeping your dependents accountable for their financial decisions is important for your retirement savings and your sanity.

Teens
Dr. Dreg’s teens are tech-savants with the latest smartphones, iPods and iPads. The oldest teen drives a new Versa while the others plot for Mustangs. A visit to the Dreg home involves very little time with the teens (when they are actually home) as texting and Facebooking occupy all their time.

Dr. Smart’s two teens also have cell phones, yet with monitored use. Cars? The kids can buy any car he or she wants, as soon as they can pay for it along with insurance. A visit to this household (when the teens are actually home) involves direct interaction, as each kid has daily texting and computer limits.

I think you already know where I’m going here. Dreg has little in retirement savings, mega credit card debt and is worried about the mortgage that’s past due. Smart is more than halfway to his retirement goal and is putting away yearly for the kids’ college educations. Yes, there seems to be an inverse correlation between children’s monthly cell phone bills and family wealth!

Dr. Gustavo Grodnitzky provides a two-minute video on YouTube¹ that lists three elements of financial education needed for teens:
  • A checking account: The teen must balance every month. One learns cash flow, along with the consequences of overspending.
  • A job: This introduces how taxes and selective spending of the teen’s money work.
  • Saving when young: $2,000 per year saved from age 15-19 placed in a Roth IRA, with no additional additions ever, will grow to around $400,000 in age-19 dollars by age 65!
    • At BillMyParents.com, Jim Collus provides allowance guidance. ² He says planners feel a teen allowance is appropriate. Collus suggests $5 times the child’s age per month be placed into each child’s own checking account with debit card. It’s easy to set up automatic recurring deposits into each kid’s account. Also, parents may receive e-mail or text alerts for each child’s transaction.

    For many, the time-honored cash allowance system is as effective, yet not as easy as Collus’s. A big advantage to cash is that it keeps kids away from anything remotely resembling a credit card for as long as possible!

    Regarding cell/smartphones, I think a heart-to-heart talk with a teen about the certainty of either amputation of the left side of one’s brain or both thumbs in later life due to radiation damage is prudent.

    On a more serious note, a thorough parent-child cell phone contract can be found online at RadicalParenting.com.3 It outlines texting usage, times of day allowed and what happens when contract overages occur.

    For Dr. Dreg, providing financial structure for his teens is a must. The best financial outcome for his children is for them to be financially independent of parents after college or by their mid-20s. The worst outcome is for Dreg to have lounge lizards in the basement aged into their 50s.

    Adult Children
    Fast-forward 10 years…

    Dr. Smart’s eldest, Emily, recently received her MBA. Two years previous, Smart and Emily had a talk upon Emily’s matriculation into business school. The following plan was devised in 2009:

    Emily would take out $110,000 in loans for business school.

    Upon business school graduation, Emily would trade in her 2003 Honda Civic for either a new Honda or late-model used car. Emily would rent an apartment, finally without a roommate.

    Emily and Dad discussed and wrote out all future expenses, such as rent, auto loan, utilities, groceries, furniture, clothes, dining out and entertainment. Her total projected budget, not including any loans or taxes, was $4,000 per month. Yes, she likes clothes and restaurants.

    After graduating, the numbers changed. In the end, Emily took out $150,000 instead of the projected $110,000 in loans. Instead of the expected $125,000 starting salary, the best Emily found in her field was an $84,000 salary at a large local utility. Her student loans total $1,800 per month. If she bought a new car, that would add another $600 per month.

    Suddenly, $84,000, or $7,000 per month, was brought down to $3,100 per month after taxes and loans – not the $4,000 projected. Something would have to give: take on a roommate, buy fewer clothes, keep her 2003 Honda for a while or learn to cook. Of course, the easiest way to keep her proposed lifestyle intact would be to live at home!

    Dr. Smart, catching the subtlety of the constant clicking of Emily’s ruby slippers, put on his dental hat, and composed a “treatment plan.”

    Emily could live at home, yet would need to pay the equivalent amount that she would pay sharing an apartment. Emily would also be responsible for sharing chores with Mom and Dad: grocery shopping, cleaning house and doing her own laundry were listed, along with no late night visitors. Smart thought about an ankle locator, yet didn’t need to go that far with this kid.

    It was the house cleaning that turned the tide. Emily kept her old Honda for a couple more years and deleted all her mobile shopping apps. During her first several months, Emily actually put $1,000 into her company’s IRA.

    Dr. Dreg had a different story. As is his luck, Dr. Dreg’s now-25-year-old daughter, Faith, recently separated from her husband of five years, needs quick help for herself and her two-year-old. The cheatin’ hubby wouldn’t move, so Faith did. She has no job, no degree and needs shelter, both physically and financially.

    Fortunately, Dr. Dreg now has a sharp attorney who drew up a document after talking over living options with Mom, Dad and daughter. Faith will take classes at the local community college to become an MRI tech in three years. During that time, Faith and daughter will live with the Dregs, who will cover all her expenses and childcare, as long as Faith stays in the program. If she leaves the program, Dad, Mom, and Faith will rewrite the document, listing financial responsibilities, guest policy and when Faith will leave.

    Additional Adult Children Tips:
    • Co-signing: After your child goes out on his or her own, co-signing anything is ill-advised. Credit cards, rental agreements and home loans must be in your child’s name. Don’t put your home or credit worthiness at risk. They must learn to do these things on their own. The major exception is when a new graduate needs a car for his or her first job and can’t qualify for a loan.

    • Health insurance: Today, adult children can stay on their parent’s policy until age 26. If the adult child can obtain insurance at work, that is best. For those over 26 without a job-sponsored plan, information on buying heath insurance can be found at www.ehealthinsurance.com.

      If you conclude that your child can’t afford all health-care responsibilities, you might help by paying the premiums and letting him pay all co-pays and the annual deductible.

    • Auto insurance: For most young people, it is normally much less expensive to stay on the family plan. Many stay on the parent’s policy, yet pay the difference between what one would pay on one’s own vs. being on the parent’s policy.

      Darryl Dahlheimer, certified consumer credit counselor in Minneapolis, warns that children who are covered under their parent’s policy tend to have more accidents. He recommends telling your child if he or she is involved in an accident, he will have to get his own coverage.&sup4;

    • Emergencies: Ken Clark, author of The Complete Idiot’s Guide to Getting Out of Debt,&sup5; advises parents to not throw out the life preserver immediately. Wait for your child to ask. Clark posits that one-third of “emergencies” resolve themselves without your help. Your child will gain confidence by coming up with his own solution. If your child does ask for help, be sure to write the plan down and have everyone sign.


    It’s all about confronting, docs! Let your children construct and live their dreams, not yours. Let them stumble, even into their 50s (you won’t remember their 60s). In the meantime, let them also learn from their mistakes and their triumphs. A final thought by author Jeff Opdyke: &sup6; “One of the greatest gifts you can give your child is your own financial self-sufficiency when you are old.”

    References
    1. www.youtube.com/watch?v=IhYQzLABcIo
    2. Steven Pomeranz, “On the Money “ iTunes podcast, March 7, 2001, start at 13:00.
    3. www.radicalparenting.com/2008/01/29/sample-cell-phone-contract-for-kids-and-parents.
    4. Help “kids” become self-sufficient, Consumer Reports Money Advisor, March, 2009, p. 7.
    5. Ken Clark, CFP, The Complete Idiots Guide to Getting Out of Debt, Penguin Group, New York, NY, 2009.
    6. Jeff Opdyke, “The 15 Money Rules Kids Should Learn”, The Wall Street Journal Sunday, March 28, 2010.


Author’s Bio
Douglas Carlsen, DDS, owner of Golich Carlsen, retired at age 53 from private practice and clinical lecturing at UCLA School of Dentistry. He writes and lectures nationally on financial topics from the point of view of one that was able to retire early on his own terms. Carlsen consults with dentists, CPAs and planners on business systems, personal finance and retirement scenarios. Visit his Web site: www.golichcarlsen.com; call 760-535-1621 or e-mail at drcarlsen@gmail.com.
Dentaltown Magazine
September 2025
Dentaltown Magazine September 2025 Read Current Issue Read Archived Issues
Sponsors
Townie Perks
Townie® Poll
Who or what do you turn to for most financial advice regarding your practice?
  
Site Menu
Message Boards Magazine Continuing Education Podcasts Blogs Classifieds Dental News Events Townie® Poll Ebooks Townie Choice Awards
Company Info
Contact Us Advertise With Us Howard Farran DDS, MBA Policies and Agreements
Site Help
Sally Gross, Member Services Specialist
Phone: +1-480-445-9710
Email: sally@farranmedia.com
©2025 Dentaltown, a division of Farran Media • All Rights Reserved
9633 S. 48th Street Suite 200 • Phoenix, AZ 85044 • Phone:+1-480-598-0001 • Fax:+1-480-598-3450